Fresnillo PLC
OTC:FNLPF
Fresnillo PLC
Nestled in the heart of Mexico's abundant mineral reserves, Fresnillo PLC stands as a colossus in the realm of precious metals extraction. Founded in 2008 and part of the Industrias Peñoles Group, Fresnillo has built a formidable reputation as a leading global producer of silver and gold. The company's robust operations are anchored in its seven mines, including the eponymous Fresnillo mine, which holds the mantle as the world’s largest primary silver mine. Driven by a relentless pursuit of excellence and efficiency, Fresnillo orchestrates a meticulous process of exploration, refining, and production, promising a steady churn of high-quality silver and gold ingots that cater to an insatiable global demand.
Fresnillo's business model is a harmonious blend of strategic exploration and operational prowess. By integrating cutting-edge technology with rigorous safety and environmental protocols, the company ensures it remains at the forefront of innovation in mining practices. With an astute eye on sustainability and cost management, Fresnillo deftly navigates the cyclicality of commodities markets. Revenue streams are primarily fueled by the sale of refined precious metals, with silver making up the lion's share. As the prices of metals often sway unpredictably, Fresnillo's judicious hedging practices and long-term contracts serve as a bulwark against volatility. Through these stringent measures and strategic foresight, Fresnillo continues to fortify its position as a mainstay in the precious metals industry, appealing to investors and stakeholders alike who value stability and sustained growth.
Nestled in the heart of Mexico's abundant mineral reserves, Fresnillo PLC stands as a colossus in the realm of precious metals extraction. Founded in 2008 and part of the Industrias Peñoles Group, Fresnillo has built a formidable reputation as a leading global producer of silver and gold. The company's robust operations are anchored in its seven mines, including the eponymous Fresnillo mine, which holds the mantle as the world’s largest primary silver mine. Driven by a relentless pursuit of excellence and efficiency, Fresnillo orchestrates a meticulous process of exploration, refining, and production, promising a steady churn of high-quality silver and gold ingots that cater to an insatiable global demand.
Fresnillo's business model is a harmonious blend of strategic exploration and operational prowess. By integrating cutting-edge technology with rigorous safety and environmental protocols, the company ensures it remains at the forefront of innovation in mining practices. With an astute eye on sustainability and cost management, Fresnillo deftly navigates the cyclicality of commodities markets. Revenue streams are primarily fueled by the sale of refined precious metals, with silver making up the lion's share. As the prices of metals often sway unpredictably, Fresnillo's judicious hedging practices and long-term contracts serve as a bulwark against volatility. Through these stringent measures and strategic foresight, Fresnillo continues to fortify its position as a mainstay in the precious metals industry, appealing to investors and stakeholders alike who value stability and sustained growth.
Operational Stability: Fresnillo reported stable operations with improvements at Fresnillo and Saucito mines, and a smooth ramp-up at Juanicipio, which is expected to reach nameplate capacity in Q3.
Cost Pressures: Production costs rose sharply—driven by Mexican peso strength and underlying inflation—resulting in profit declines at all levels versus last year.
Financial Results: EBITDA, gross profit, and net profit all fell significantly year-on-year despite higher revenues, mainly due to cost inflation and FX impacts.
CapEx Guidance Cut: 2023 CapEx guidance was reduced from $630 million to $555 million after project reviews and revised timing, while 2024/25 CapEx is expected to remain flat.
Exploration Spend: Exploration investment was front-loaded in H1, with strong results in Guanajuato and Tajitos, though overall full-year exploration spend is expected to meet guidance.
Dividend Maintained: The company maintained a healthy dividend payout, supported by a strong balance sheet and continued operating cash flow.
Guidance Reaffirmed: Full-year operational and production guidance for 2023 was reiterated.
Cost Savings Initiatives: Numerous efficiency projects are underway to offset cost increases, with most savings expected to be realized by early 2024.
